Deficit reduction will cost students
Act to increase interest rates on college loans
The U.S. House of Representatives passed a revised Deficit Reduction Act on Wednesday that will cut $12.7 billion from federal student loan programs as part of a five-year, $39 billion savings plan. Most of the $12.7 billion cut will stem from locking student loans into a fixed interest rate, said Dave Feitz, associate executive director of the Utah Higher Education Assistance Authority.
A 6.8 percent fixed rate would replace the current 5.3 percent variable rate students are now eligible for on Stafford Loans. With the average Utah student debt for a four-year degree pegged at about $15,000, Feitz said students could expect to pay close to an extra $1,360 over the 10-year life of a loan.
"Sure, the monthly payment isn't that much different, but over the life of the loan it costs students a significant amount of money," he said. "It makes the student loans more expensive for students, which we think is the wrong approach at a time when the nation needs to be investing in higher education."
The fixed loan rate, which would become effective July 1, couldn't come at a worse time, said John Curl, director of financial aid at the University of Utah. With increasing tuition rates and cost of living, students are already struggling to pay for education.
"There hasn't been an investment in this program to begin with and then for the majority of the deficit to be reduced by student aid, that's disheartening," Curl said.
Supporters of the bill say the measure stabilizes the student loan system and offers incentives for students, like higher loan limits and lower student fees. In addition, the law increases grant aid for math and science students.
"These reforms will result in a stronger student aid system for students and taxpayers. We can expand college access for low- and middle-income students while simultaneously generating savings for all American taxpayers by reducing program waste and inefficiency, and giving the programs a strong financial footing for future generations of students," states a November letter from the U.S. House Committee on Education and the Workforce.
The law, which includes cuts to other federal programs, narrowly passed the House in November and squeezed past the Senate with a 51-50 vote on an amended version. The tight 216-214 House vote Wednesday passes the revised legislation out of Congress.
Utah Valley State College student Leland Page, president of the American Student Association of Community Colleges, said he's been rallying students around the nation to oppose the legislation and lobby lawmakers to vote down the measure.
One student group in Connecticut even held a mock vote, Page said, in which students unanimously cast their votes against the law.
"I know we have to make budget cuts, but let's look for other options. They're cutting student loans, but giving tax breaks to wealthy Americans," Page said. "Which is more important? Our college students who are our future economy?"
E-mail: estewart@desnews.com
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